WELCOME TO THE 11WELCOME TO THE 11thth ANNUAL SOUTH ANNUAL SOUTH TEXAS WILDLIFE CONFERENCETEXAS WILDLIFE CONFERENCE

PERSONAL QUESTION?PERSONAL QUESTION?

Does speaking between two Does speaking between two “Honorable” men make me:“Honorable” men make me:

(1)(1) An An “Honoree” or or

(2)(2) Just plain “Just plain “Ornery?”

AT TEXAS A&M UNIVERSITY

Judon FambroughJudon Fambrough

Attorney at LawAttorney at Law Condemn me not!Condemn me not!

PUBLICATIONS OF INTEREST PUBLICATIONS OF INTEREST FROM THE REAL ESTATE FROM THE REAL ESTATE

CENTERCENTER Hints on Negotiating an O & G LeaseHints on Negotiating an O & G Lease Secrets on Negotiating Groundwater Secrets on Negotiating Groundwater

LeasesLeases ““Blowing the Dirt off Wind Leases”Blowing the Dirt off Wind Leases” Minerals, Surface Rights and Royalty Minerals, Surface Rights and Royalty

PaymentsPayments Understanding the Condemnation Understanding the Condemnation

Process in Texas Process in Texas The Texas Deer LeaseThe Texas Deer Lease

recenter.tamu.edurecenter.tamu.edu judon@recenter.tamu.edujudon@recenter.tamu.edu

The Trans-Texas Corridor The Trans-Texas Corridor

and and

Eminent DomainEminent Domain

DefinitionsDefinitions

What is the difference between What is the difference between “Eminent Domain”“Eminent Domain” and and “Condemnation”“Condemnation”??

PRONUNCIATION ofPRONUNCIATION of“CONDEMNATION”?“CONDEMNATION”?

Afterwards, Afterwards, “CONNED! DAMN “CONNED! DAMN NATIONS!”NATIONS!”

I’ve been I’ve been “CONNED”“CONNED” AND AND DID DID NOT KNOW IT.NOT KNOW IT.

Insight gained in Insight gained in HubanekHubanek Case Case decided by Tx Supreme Court in decided by Tx Supreme Court in 2004.2004.

I AM SITTING ON A POT OF I AM SITTING ON A POT OF GOLD!GOLD!

“Too many landowners focus on the amount ofthe payment and not the property rights being taken for that payment.”

Four Legal RestraintsFour Legal Restraints

Public Purpose (Public Benefit)Public Purpose (Public Benefit) Kelo v. New LondonKelo v. New London Public Necessity (Amt. of land and Public Necessity (Amt. of land and

the type of estate taken)the type of estate taken) Just Compensation (Questionable Just Compensation (Questionable

after after HubenakHubenak)) Due Process –Outlined in Chapter 21 Due Process –Outlined in Chapter 21

of the Texas Property Code–of the Texas Property Code–Reinterpreted after Reinterpreted after Hubenak.Hubenak.

““Traditional”Traditional” Texas Due Process Texas Due Process(Three Stages)(Three Stages)

11st st Bona Fide Attempt to Purchase: Bona Fide Attempt to Purchase: (Negotiate in Good Faith based on Fair (Negotiate in Good Faith based on Fair Market Value.) If Market Value.) If “Unable to Agree on “Unable to Agree on Damages”Damages” go to next stage. go to next stage.

22ndnd Special Commissioners Hearing before 3 Special Commissioners Hearing before 3 freeholders: (Project may begin freeholders: (Project may begin immediately after award posted.)immediately after award posted.)

33rdrd If either party dissatisfied, Judicial If either party dissatisfied, Judicial Appeal all the way to Texas Supreme Appeal all the way to Texas Supreme Court.Court.

TraditionalTraditional Strategies Strategies

LandownersLandowners: remain in Stage I to : remain in Stage I to keep the project from going forward keep the project from going forward and hopefully getting the most and hopefully getting the most money possible without any out-of-money possible without any out-of-pockets costs.pockets costs.

CondemnorsCondemnors: get to and through : get to and through Stage II, as quickly and as cheaply as Stage II, as quickly and as cheaply as possible, so the project can possible, so the project can commence and hopefully never stop.commence and hopefully never stop.

In 2004, In 2004, HUBENAKHUBENAK DECISION DECISIONby TxSCt.by TxSCt.

Inadequate offer made to landowners Inadequate offer made to landowners in Stage I for pipeline easement, andin Stage I for pipeline easement, and

Condemnor offered to purchase 3 Condemnor offered to purchase 3 property rights it could not condemn:property rights it could not condemn: Warrant and Defend TitleWarrant and Defend Title Transport both Oil and Gas Transport both Oil and Gas Right of Assignment.Right of Assignment.

3 Issues on Appeal3 Issues on Appeal

1)1) Does the “Unable-to-Agree-on- Does the “Unable-to-Agree-on- Damages” standard in Stage I Damages” standard in Stage I require a Bona Fide Offer based on require a Bona Fide Offer based on Fair Market Value? Fair Market Value?

2)2) If the Bona-Fide-Offer Rule is If the Bona-Fide-Offer Rule is violated, does it deprive the court of violated, does it deprive the court of jurisdiction and result in a dismissal jurisdiction and result in a dismissal of the lawsuit in Stage III?of the lawsuit in Stage III?

First AnswerFirst Answer

““The dollar amount of the The dollar amount of the condemnor’s offer should not be condemnor’s offer should not be scrutinized nor compared with other scrutinized nor compared with other indications of value. indications of value. A single offerA single offer by the condemnor satisfies the by the condemnor satisfies the requirement regardless of the requirement regardless of the amount.”amount.”

Second Answer?Second Answer?

““Negotiating in Good Faith is no Negotiating in Good Faith is no longer required to confer jurisdiction longer required to confer jurisdiction on the court.”on the court.”

““The modern direction of policy is to The modern direction of policy is to reduce the vulnerability of final reduce the vulnerability of final judgments to attack on ground that judgments to attack on ground that the tribunal lacked subject matter the tribunal lacked subject matter jurisdiction.”jurisdiction.”

Third IssueThird Issue

3) Does the offer to purchase in Stage I 3) Does the offer to purchase in Stage I have to match the property have to match the property and and property rightsproperty rights that can that can subsequently be condemned?subsequently be condemned?

Answer: Answer: Yes and No.Yes and No. The parties must The parties must negotiatenegotiate for the for the

same physical property and but only same physical property and but only the same general use or uses.the same general use or uses.

Caveat EmptorCaveat Emptor“Here’s the Con”“Here’s the Con”

The rights (property rights) that the The rights (property rights) that the Condemnor attempts to purchase in-Condemnor attempts to purchase in-lieu-of-condemnation do not have to lieu-of-condemnation do not have to match (mirror) the rights the match (mirror) the rights the Condemnor may ultimately Condemnor may ultimately condemn.condemn.

Do you know which ones these are?Do you know which ones these are? What difference does it make?What difference does it make?

What the Landowners What the Landowners Did Wrong in HubanekDid Wrong in Hubanek

1)1) The issues were not discussed by the The issues were not discussed by the parties in the Stage I negotiations.parties in the Stage I negotiations.

2)2) No issue raised as to the value of these No issue raised as to the value of these property rights in Stages I or II.property rights in Stages I or II.

3)3) No evidence the L.O. would have (1) No evidence the L.O. would have (1) accepted the offer had these property accepted the offer had these property rights had been omitted from the offer or rights had been omitted from the offer or (2) purchased separately?(2) purchased separately?

4)4) No evidence these matters were material No evidence these matters were material to the negotiations.to the negotiations.

This is a Trick Question.

If the landowner prevails in litigation,either in Stage 2 or 3, can he or she recover

attorney fees and expert witness fees?

THE COURT CONTHE COURT CON““If the commissioners award greater If the commissioners award greater

damages than the condemnor offered to damages than the condemnor offered to pay before the proceedings began or if the pay before the proceedings began or if the decision of the commissioners is appealed decision of the commissioners is appealed and a court awards greater damages than and a court awards greater damages than the commissioners awarded, the the commissioners awarded, the condemnor shall pay all costs.”condemnor shall pay all costs.”

Section 21.047, Texas Property Code.Section 21.047, Texas Property Code.

Query?Query?

Do you “Aggies” know the difference Do you “Aggies” know the difference between a between a “Cost”“Cost” and an and an “Expense”?“Expense”?

GET THIS!GET THIS!

Attorney fees and expert witness fees are Attorney fees and expert witness fees are ““expenses”expenses” for preparation of trial. for preparation of trial. They They may not be recoveredmay not be recovered as an item of as an item of “cost”“cost” unless the statute specifically unless the statute specifically provides. Otherwise, they are merely provides. Otherwise, they are merely incidental non-recoverable expenses.incidental non-recoverable expenses.

City of Houston v. Biggers, 380 SW2d 700, City of Houston v. Biggers, 380 SW2d 700, 19641964

Voice of an ExpertVoice of an Expert(James Noble Johnson)(James Noble Johnson)

““It makes no economic sense to It makes no economic sense to appeal to Stage 3 unless the amount appeal to Stage 3 unless the amount in controversy exceeds $50,000. in controversy exceeds $50,000. Most pipeline cases are less than Most pipeline cases are less than $5,000.”$5,000.”

A Houston attorney said $400,000.A Houston attorney said $400,000.

““THE TTC CON”THE TTC CON”

Current Map of Current Map of

““PreferredPreferred

Corridor” Corridor”

Route appox. Route appox.

10-mile wide.10-mile wide.

FACTS ABOUT TTCFACTS ABOUT TTC

1)1) Chapter 227 of the Transportation Chapter 227 of the Transportation Code contains the Trans-Texas Code contains the Trans-Texas Statute.Statute.

2)2) But, Section 227.041 gives the TTC But, Section 227.041 gives the TTC the same the same powers and powers and “duties“duties”” as as given toll projects under Subchapter given toll projects under Subchapter D, Chapter 203 of the D, Chapter 203 of the Transportation Code.Transportation Code.

FACTS ABOUT TTCFACTS ABOUT TTC

1)1) Statute says TTC “may condemn the fee Statute says TTC “may condemn the fee or lesser interest propertyor lesser interest property.”(203.051).”(203.051)

2)2) All land prices are falling within the All land prices are falling within the PREFERRED CORRIDOR ROUTE (10-mile PREFERRED CORRIDOR ROUTE (10-mile width.) (Not Normal)width.) (Not Normal)

3)3) TTC cannot condemn the minerals, but it TTC cannot condemn the minerals, but it can condemn the right of ingress and can condemn the right of ingress and egress to produce the minerals. egress to produce the minerals. (203.051)(203.051)

DEVELOPMENT RIGHTSDEVELOPMENT RIGHTS

According to the Statute, property According to the Statute, property owners “May Elect” to retain owners “May Elect” to retain development rights.development rights.

If retained and owner does not develop If retained and owner does not develop property W/I period set by Dept., property W/I period set by Dept., the Department may acquire Dev. the Department may acquire Dev. Rts. by purchase or condemnation.Rts. by purchase or condemnation.

REAL PROPERTY REAL PROPERTY LAW 101LAW 101

The seller’s rights and interests not The seller’s rights and interests not reserved in a Deed are Conveyed.reserved in a Deed are Conveyed.

If you deed the land to TTC in lieu of If you deed the land to TTC in lieu of condemnation without any reservations, condemnation without any reservations, TTC gets all the rights and interest you own TTC gets all the rights and interest you own in the property even though TTC could not in the property even though TTC could not condemn them… including the minerals, condemn them… including the minerals, groundwatergroundwater, , windwind, , uraniumuranium and and development rights.development rights.

Is the TTC offering FMV?Is the TTC offering FMV?

The Austin American Statesman says The Austin American Statesman says NONO..

Austin-American StatesmanAustin-American StatesmanFeb. 14, 2005Feb. 14, 2005

Report based on 49-mile route cutting Report based on 49-mile route cutting through Travis and Williamson through Travis and Williamson Counties to be Texas Hwy. 130 and Counties to be Texas Hwy. 130 and 11stst part of the Trans Texas Corridor. part of the Trans Texas Corridor.

• 44% of landowners rejected state’s 44% of landowners rejected state’s first offer, three times the normal first offer, three times the normal rate.rate.

ComparisonComparison

In eight side-by-side tracts that share In eight side-by-side tracts that share critical characteristics, the Special critical characteristics, the Special Commissioners Court awarded, on Commissioners Court awarded, on the average, 71% more to those who the average, 71% more to those who appeared than to those who took the appeared than to those who took the state’s first offer.state’s first offer.

How did the State React?How did the State React?

Remember either side may appeal Remember either side may appeal the award and ask for a jury trial,the award and ask for a jury trial,

And, the landowner And, the landowner cannotcannot collect collect attorneys’ and/or appraisers’ fees attorneys’ and/or appraisers’ fees whether he or she wins on appeal. whether he or she wins on appeal.

Guess what, about half of the Special Guess what, about half of the Special Commissioners Court awards have Commissioners Court awards have been appealed been appealed by the state!by the state!

How does Hubanek help How does Hubanek help the TTC?the TTC?

Hubanek Hubanek insures that the process insures that the process goes quickly, cheaply and goes quickly, cheaply and uninterruptedly.uninterruptedly.

Legislative AssistanceLegislative Assistanceduring 80during 80thth Legis. Session? Legis. Session?

Two key bills were passed:Two key bills were passed:• HB 2006 (Reinstated pre-Hubanek HB 2006 (Reinstated pre-Hubanek

procedural rules) andprocedural rules) and• HB 1465HB 1465• (HB 2006 passed the House 125 to (HB 2006 passed the House 125 to

11 and the Senate 28 to 2.)11 and the Senate 28 to 2.)

HB 2006HB 2006 Required Bona Fide Attempt to Required Bona Fide Attempt to

purchase based on FMV in Stage I.purchase based on FMV in Stage I. Required Abatement if bona-fide-Required Abatement if bona-fide-

attempt rule violated.attempt rule violated. FMV defined.FMV defined. Payment for diminished access. Payment for diminished access. Attorney fees if declared frivolous.Attorney fees if declared frivolous. Attorney fees if they do not produce Attorney fees if they do not produce

requested information.requested information.

Fate of HB 2006?Fate of HB 2006?

Vetoed by Governor in June after Vetoed by Governor in June after Legislative Session adjourned.Legislative Session adjourned.

Why?Why? Payment for diminished access is an Payment for diminished access is an

“unreasonable burden on taxpayers.”“unreasonable burden on taxpayers.” ““Enrich a finite number of Enrich a finite number of

condemnation attorneys at condemnation attorneys at taxpayers’ expense.”taxpayers’ expense.”

New Legislation New Legislation ((eff. 2/1/08)eff. 2/1/08) (HB 1495)(HB 1495)

““The Landowner’s Bill of Rights The Landowner’s Bill of Rights (and (and Wrongs)Wrongs) Act” Act”

The Attorney General shall prepare a The Attorney General shall prepare a written statement that includes a Bill written statement that includes a Bill of Rights of Rights (and Wrongs)(and Wrongs) for property for property owners facing condemnation.owners facing condemnation.

It must notify each property owner of It must notify each property owner of the 5 following facts.the 5 following facts.

1)1) Notice of proposed acquisition. Notice of proposed acquisition.

2)2) You are entitled to aYou are entitled to a bona fide, good bona fide, good faith effort to negotiate acquisition by faith effort to negotiate acquisition by purchase.purchase.

Note:Note: This is a This is a false statementfalse statement..

HB 2006 was vetoed!HB 2006 was vetoed!

3) The condemnation will result in a taking 3) The condemnation will result in a taking of your property.of your property.

4) You are entitled to a hearing (Stage II)4) You are entitled to a hearing (Stage II)

5) You are entitled to judicial appeal (Stage 5) You are entitled to judicial appeal (Stage III)III)

What the What the BORBOR does not say!does not say!

1)1) You cannot recover attorney fees and You cannot recover attorney fees and appraisers fees if you successfully appraisers fees if you successfully combat “Damages.”combat “Damages.”

2)2) The property rights they attempt to The property rights they attempt to purchase in lieu of condemnation do not purchase in lieu of condemnation do not have to match the actual property rights have to match the actual property rights they can condemn.they can condemn.

3)3) No payment for diminished access???No payment for diminished access???4)4) Condemnation of Fee Title is optional, Condemnation of Fee Title is optional,

not mandatory.not mandatory.5)5) A participation payment may be received A participation payment may be received

after 15 years when bonds retired.after 15 years when bonds retired.

Reaching the “Other Side”Reaching the “Other Side”

1) The TTC may allow the owner to tunnel 1) The TTC may allow the owner to tunnel under corridor in compliance with federal under corridor in compliance with federal law. (227.047) law. (227.047) How How BIGBIG is your shovel? is your shovel?

2) The TTC 2) The TTC shall offer to purchaseshall offer to purchase the the other side if it has little or no value or other side if it has little or no value or utility to the owner (or) the TTC can utility to the owner (or) the TTC can purchase the entire tract at substantially purchase the entire tract at substantially the same price. (203.0521)(a)…but the same price. (203.0521)(a)…but inapplicable if hazardous materials or inapplicable if hazardous materials or substances present.substances present.

Sec. 203.0521(b)Sec. 203.0521(b)

3) When real property is severed, the 3) When real property is severed, the condemnor condemnor shall payshall pay the owner: the owner:

a) the value of the property acquired a) the value of the property acquired

andand

b) the damages caused by b) the damages caused by inaccessibility of one tract from the inaccessibility of one tract from the other.other.

FinallyFinally

Sec. 203.051(d), the TTC is not Sec. 203.051(d), the TTC is not authorized to condemn property that authorized to condemn property that is used and dedicated for cemetery is used and dedicated for cemetery purposes under the Health and purposes under the Health and Safety Code.Safety Code.

Closing Biblical AdviceClosing Biblical Advice

Matt. 10:16:Matt. 10:16:

““Behold I send you forth as sheep in Behold I send you forth as sheep in the midst of wolves; be ye the midst of wolves; be ye therefore wise as serpents and as therefore wise as serpents and as harmless as doves.”harmless as doves.”

GOOD LUCK!GOOD LUCK!

HAPPY TRAILS (NOT TRIALS) to you…HAPPY TRAILS (NOT TRIALS) to you…